IASB considers delay in revenue recognition standard

The IASB had previously set an implementation date of January 1, 2017 for its new revenue recognition standard.  The Journal of Accountancy is reporting that the IASB is seeking feedback on a delay of the effective date to January 1, 2018.  Early application would be permitted. 

From the Journal of Accountancy:

Upon issuing the standard jointly with FASB in May 2014, the IASB set an effective date of Jan. 1, 2017. But discussions of implementation difficulties with the boards’ joint transition resource group have led the boards to decide to propose targeted amendments to assist financial statement preparers in implementation.

The discussion led the boards to propose the delay; the IASB’s new effective date for IFRS 15, Revenue From Contracts With Customers, would be Jan. 1, 2018, if the delay is approved. Early application would be permitted.

The IASB is seeking comments on the proposed delay. Comments, which are due July 3, can be submitted at the IFRS website. Feedback is scheduled to be considered at the IASB’s meeting in July, when the board plans to decide whether to change the effective date.

In addition, the IASB plans to issue an exposure draft of targeted amendments to the revenue recognition standard, which will include clarifying some of its requirements and adding illustrative examples to assist implementation.


This October, IPQC and the Shared Services & Outsourcing Network (SSON) are launching the inaugural FITECH conference to provide a forum for finance and technology executives to understand how technology can support the Finance function.

According to the conference brochure:

FITECH 2014 is the only event offering comprehensive, impartial insight into the nuts and bolts of hi-tech Finance transformation. Peer-led, with no vendors pitching on stage, the event brings together the leading experts and battle-scarred practitioners to share their truths around the evolving challenges and tangible opportunities of Finance Technology investment. All in one simple 2 day forum.  Running as a completely interactive strategic-level discussion group, this unique event is specifically designed to help you understand how to invest wisely and unleash new potential from your Finance operations.

FITECH 2014 is the only forum assisting you to make informed choices on where innovation is required within your Finance team, and how to make the most effective investment in the latest products on the market.

Click on the FITECH2014 link on this page to learn more.  You can also download the conference brochure here.



Choosing the Starting Point for a Finance Transformation Effort


When discussing potential transformation opportunities with clients, the question that inevitably comes up is "Where do we start?"  Given the myriad of challenges in the typical finance organization, it's a natural question to ask.  And often the answer is not the obvious one people often expect.

Many companies, particularly if they have a benchmark project commissioned as part of a transformation project, will often focus on the areas that offer the greatest cost savings or perhaps meet a critical delivery need that is not currently being addressed.  Under appropriate circumstances, these may not be bad choices.  However, there are other considerations for the leadership group evaluating a portfolio of improvement opportunities.

Generally speaking, the following factors should be evaluated as part of the decisions as to how and where a transformation initiative should be launched.  In my experience, a company should choose an initial transformation project where:

  • There is strong executive support for change.  Very little will happen if the senior executives in the area under consideration won't back the project in word and deed.  Transformation teams should find a specific area: a business unit, a region or a specific process, where the executives in charge of that area have publicly recognized the need for change and are clearly willing to support transformation efforts.
  • The barriers to successful change are not huge.  Let's face it.  Some transformation opportunities are tougher than others.  It often makes sense to get a transformation program started by choosing an initiative that doesn't have huge obstacles to change.  Typically, transformation programs that involve large technology implementations can take a year or more to fully compete.  Project like that can take too long to build momentum. Or perhaps a particular initiative lacks executive support.  That can make it difficult to get the budget and personnel to make the project successful.  The point is, you and your project team don't have to climb Mt. Everest on your first hike.
  • The scope can be clearly defined.  Actually coming up with a proposed scope is typically not the problem.  Far more often the team proposes a scope and then over time the scope increases, typically because management is pushing for the greatest value for as little investment as possible - without a corresponding increases in the budget and project team.  There's nothing wrong with challenging the assumptions in the business case, but projects with constant scope creep after deliver less than expected. It's critical to define the scope in such as way that it is clearly defined and relatively achievable.  Which brings me to the next point.
  • The initial project has a strong chance of succeeding and can succeed in a relatively short time frame.  Nothing is more frustration to senior management and to the project team than to be a part of a project that drags out with no discernible benefit to the organization.  I personally believe that first victory should occur within six months.  Any longer than that and you risk grumblings in the company about how money is being poured into a project with no realized benefits.  This first win is critical to prove to the broader organization that the transformation team can in fact deliver value.  Once that occurs, you'll find more managers jumping on the bandwagon.
  • The chosen scope of work has a strong project team members behind it who actually have time to be involved.  Few things can stall out a project faster than a "dedicated" project team that in reality is working their day job and performing transformation opportunities on the side.  Your company's first project should have sufficient resources dedicated to the project to virtually ensure success.  Some positions may need to be back filled on a temporary basis, but that is a cost of successful transformation.
  • The project chosen can serve as a model for future transformation efforts.  The transformation program should look for a project that can serve as a model for future efforts.  That means the project has to be large enough to make an impact, but not so impossibly large that benefits are delivered late, if at all.  This initiative needs to be your "case study" of how your team can transformation finance and drive real benefits to the organization..

No project has a 100% guarantee of being successful and delivering on the promised value.  However, by following these steps, the project team has a good change of success, driving confidence from future project sponsors that tangle benefits can be realized within a reasonable timeframe.

EU institutes mandatory auditor rotation

The European Union recently mandated the rotation of auditors for public companies.  The ruling requires a rotation after 10 years, although there are ways for companies to extend the rotation period, including putting the audit contract out to bid, even if the incumbent firm is chosen again.  European Internal Market and Services Commissioner Michel Barnier was quoted as saying “These new measures will reduce risks of excessive familiarity between statutory auditors and their clients, encourage fresh thinking, and limit conflicts of interest".  

Additionally, there are additional reporting requirements as a result of the audit process, including the requirement to provide a detailed to the company's audit committee that is not necessarily intended for public disclosure.

How corporate strategy informs reporting strategy

An effective reporting strategy supports corporate strategy by supplying the measures and metrics that align organizational behavior with organizational objectives. The choice of corporate strategy, such as product innovation, customer intimacy or operational excellence will influence what information is emphasized in a company’s reporting strategy. 

There are different strategy frameworks but at a basic level they can be divided into cost leadership or differentiation.  Types of differentiation include product innovation and customer intimacy.  The choice of strategy will dictate the types of measures and metrics that are important to the organization, both at the senior leadership level and throughout the organization.  A comprehensive management reporting strategy will include measures and metrics that focus on effectiveness of delivery as well as the efficiency of the processes, but each company will craft it's performance scorecard in a way that provides critical information about strategy execution to its managers.

More broadly, the choices of strategy execution will also inform the choice of management reporting measures chosen.  Is a company pursuing its strategy by focusing on individual countries or Strategic Business Units (SBUs) that are managed globally?  This overlaps with the choice of organizational structure, but effective management reporting aligns measures and metrics with the key responsibility centers within the organization.

If a company is pursuing its strategy through country-focused execution, then the management reporting system will align critical measures with the country management structure.  On the other hand, if a company pursues strategy execution through global SBUs, then the management reporting structure will align with the SBU responsibility centers to ensure that the information received through the management reporting structure provides critical information to the SBU leaders.

The choice of strategy and the organizational alignment created to execute that strategy go hand-in hand.  In a future post I'll discuss in further detail how the choice of organizational structure informs the requirements of a company's management reporting systems.

The Six Levers of a Comprehensive Reporting Strategy

Chart and magnifying glass.jpg

A company’s reporting strategy provides the foundation for a robust and mature information management program designed to deliver timely, relevant and actionable information to the company’s management in order to make sound decisions when executing the corporate strategy. Regrettably, most companies have have an incomplete reporting strategy, not having considered all of the dimensions required to produce a mature reporting environment.  

A mature reporting strategy is based on six levers:

  1. Corporate Strategy,
  2. Information Management,
  3. Process Management,
  4. Organizational Alignment,
  5.  Reporting Governance, and
  6. Technology Enablement

These six levers work together to effective drive a company’s information management program. Managed as a strategic asset, the information generated and reported to a company’s management group will yield valuable and actionable insights. All of these levers must be incorporated into the reporting strategy in order to yield the most effective reporting environment.  In future posts, I'll delve into each of these dimensions to show how a company can establish and maintain a robust and mature reporting environment.



The PCAOB proposes changes to the Auditor's reporting model


In the drive for greater transparency in financial reporting, the Public Company Accounting Oversight Board (PCAOB) has issued a proposal to enhance audit reports by identifying and reporting on critical audit issues as part of a company's audit.  An article in the Journal of Accountancy identifies four key areas of focus for the proposed standards:

  • A statement of auditor independence. This would explain that the auditor is a public accounting firm registered with the PCAOB and is required to be independent with respect to the company.
  • Tenure disclosure. The audit firm would disclose the year it began serving as a company’s auditor.
  • Other information explanation. The auditor would be required to describe the procedures and evaluation the firm performed on other types of information included in the annual report outside the financial statements.
  • Language enhancements. These would change existing language in the auditor’s report related to the auditor’s responsibilities for fraud and notes to the financial statements.

A key component of the proposal would be the requirement to identify and report on critical audit matters, which are defined as matters addressed during the audit that:

  • Involved the most difficult, subjective, or complex auditor judgments;
  • Posed the most difficulty to the auditor in obtaining sufficient appropriate evidence; or
  • Posed the most difficulty to the auditor in forming an opinion on the financial statements.

When critical audit matters are determined, auditors would be required in their report to:

  • Identify the critical audit matter.
  • Describe the considerations or reasons that the matter was identified as critical.
  • Refer to the relevant financial statement accounts and disclosures that relate to the critical audit matter, when applicable.

Among the other requirements, auditors would be required to evaluate the company's 10-K filing and review selected financial data as well as the Management Discussion & Analysis. 


Argentina and the truthiness of government statistics


Argentina was recently in the news for being in trouble with the International Monetary Fund (IMF).  It seems that the IMF, and many others, have an issue with the truthfulness of Argentina's government issued statistics, particularly with the stated inflation rate.  In 2012, the official inflation rate as determined by the government was 10%.  However, many private economists, both in Argentina and elsewhere, think the actual inflation rate is around 25% per year.

For the multinational looking at countries to locate operations, including Shared Services, the actual and expected inflation rate for a country is a critical factor in determining labor costs.  To that end, it's critical to have an understanding of the true economic factors of a country and city before committing to a long-term presence there.  So if you can't completely trust a country's published economic information, how can a company be sure that the data, particularly labor costs, it incorporates into its business case are reliable?  Here are three ways to corroborate, or refute, labor cost information published by a government:

  1. For a first cut look at salaries, there are free resources such as Glassdoor that can give you some sense of the salaries in a particular country or city.  This data is unlikely to meet all of your data requirements, but it can give you a sense if the government published numbers are reasonable.
  2. For a more comprehensive survey of global salaries, you can purchase information from companies that specialize in this type of information.  One example is Mercer, and their global salary survey.
  3. A third option, if you have access to a consulting firm, is to get their take on particular countries and cities.  As an added bonus, they may be able to set up a call with one or more of their clients in that country or city to get a first hand assessment of life on the ground.

These options are by no means mutually exclusive, and it's likely that you'll incorporate one or more of them into your analysis.  It's important not to take government statistics at face value, even for more industrialized countries.  It's important to trust but verify.

City Profile: Chengdu, China


The Chinese government has actively worked to create additional economic zones for international investment.  Increasingly, these have been further inland to leverage population centers where wage inflation hasn't been as strong.  The city of Chengdu, the capital of Sichuan province, is one city that has been developing to serve the needs of multinationals.

In 2007, this city of 14 million was designated as a Special Economic Zone (SEZ) by the government to spur investment and development.  Among the incentives are favorable tax programs to promote investment.  Investment in Chengdu is being driven by both the national government as well as Foreign Direct Investment (FDI).  Much of the FDI is directed towards the information technology sector, but manufacturing, transportation and financial services have also benefited from FDI.  Chengdu is one of 21 cities designated by China's State Council to serve as a model for the outsourcing industry.

Chengdu is one of the four major international air hubs in China after Beijing, Shanghai and Guangzhou.  An Airbus 380 can land in Chengdu.  In late 2012, British Airlines established a non-stop flight from London Heathrow.  A number of other international carriers, including Air China, Lufthansa, United, Cathay Pacific and others also fly into Chendgu.  The city is not more than 2.5 hours flight from Shanghai, Beijing, and Hong Kong. 

Language capabilities in Chengdu include Japanese, Korean, English and, of course, Mandarin and Cantonese Chinese.  Other languages such as French, German, Russian and Thai are also available.  A number of companies have set up in Chengdu to establish Asian regional hubs or global service centers capable of serving operations outside of China.

Salaries are typically lower than more established cities like Shanghai or Bejing.  In Shanghai or Beijing, for instance, a college graduate can earn a salary of 3,000 RMB or more per month.  In Chengdu, an equivalent degree would bring a salary of around 1,850 RMB per month, a savings of almost 40%.

Office rent for Class A office space is very competitive with more established locations in China.  Following are typical rents in RMB/Square Meter/Month (Source: Cushman & Wakefield analysis)

  • Beijing                 525
  • Shanghai            415
  • Shenzen              288
  • Guangzhou         220
  • Chengdu             161

Multinationals with operations in Chengdu include Intel, Amazon.com, ANZ Bank, Microsoft, Motorola, Toyota, GE, JP Morgan Chase, and Nippon Steel.  More than 200 of the world's top 500 enterprises has a presence in Chengdu.  Additionally, a number of companies have set up Shared Service Centers to support business in China and across Asia.  These include Siemens, DHL and Maersk.

If you're looking for an Asian city to establish a Shared Service Center, it may make sense to look at Chendgu and discover what a number of other multinationals have discovered.

CFOs look for non-accounting skills in accountants

A new survey by Accountemps discusses the qualities CFOs look for in their accountants.  The survey polled 3,200 CFOs to get their perspective on the types of non-accounting skills that would make these accountants more valuable.

According to the survey, CFOs wanted:

  • General business knowledge (33%)
  • Expertise in information technology (25%)
  • Communication skills (14%)
  • Leadership abilities (13%)
  • The remainder said they didn't know or did not provide an answer (I hope it was that they didn't answer and not that they didn't know!)

I find these responses to be interesting.  It makes sense that general business knowledge is desirable.  In fact, it often one of the top complaints of Operations managers that their company's accountants don't really understand their business.  

Expertise in IT can mean a lot of different things, but here they mean the ability to leverage technologies like SAP and Oracle to perform their work.  This makes sense as new employees can be more productive sooner and the workforce overall can leverage technology to improve their efficiency.

Interestingly, leadership and communication were down on the list.  I actually believe both of these are important in order for a finance organization to build competencies over time.

One thing not on the list jumped out at me.  That's having global work experience and a global perspective.  As the finance function becomes more globalized, it will be essential for finance and accounting staff to work effectively with different cultures and locations around the globe.

What other skills do you think accounting staff should posses?  You can post your answers in the comments section below.

FASB moves forward with controversial lease accounting standard

The Financial Accounting Standards Board (FASB) narrowly voted to release a draft statement on lease accounting for public comment.  The draft proposal would require all leases to be put on the balance sheet and would create two models for accounting based on the level of expected consumption during the life of the lease.

Dissenting members of FASB thought the proposed standard increased financial reporting complexity by placing lease information in multiple areas of the financial statements.

FASB Chairman Leslie Seidman noted that the FASB standard was coordinated with the IASB, which intends to release an exposure draft by June 30, 2013.

You can read the Journal of Accountancy article here.

Five ways for Finance to know it's time to engage in organizational redesign


In an increasingly global environment, a hallmark of leading finance organizations is the ability to reorganize to meet changing demands.  But how does Finance leadership know when it's time to make a major change in the structure of its organization?  Here are five ways to know it's time to realign organizational resources:

  1. Change in strategic direction. Each organization has a basic strategy that guides its focus in the market.  These strategic intents focus on differentiators such as product innovation, customer intimacy or operational excellence.  A change in focus could warrant a redesign.  And it doesn't have to be a wholesale change.  Even a change in emphasis between the various dimensions of competitive advantage should drive changes in the organization.
  2. Acquisition or divestiture. Mergers, acquisitions and divestitures can change the economics of previous design decisions.  An acquisition might bring with it certain in-house expertise that wasn't previously available.  A change in focus that comes with a major acquisition could drive the decision to outsource a number of finance functions.
  3. Expansion into new product markets.  The introduction of new products or product lines could drive organizational change  to align finance resources more closely with the business.  Business units focused on industries with faster product introduction and obsolescence rates would likely warrant a higher degree of finance support embedded in their business.
  4. Expansion into new geographic markets.  Entering into a new geographic market where the company has little to no experience may warrant a redesign.  In this situation a business case could be made to partner with a 3rd party service provider to facilitate the learning curve in a new market, as well as to assist with the development of a captive service center, if that's the long-term direction of the company.
  5. Finance needs to improve its game. Even if none of the above are true, it may still make sense to engage in organizational redesign if the Finance group isn't meeting expectations.  This could be in the area of business partnership, or cost efficiency, or both.  The Finance organization should be continuously evaluating its performance through benchmarking and customer satisfaction surveys to monitor performance and improve accordingly.  An organizational redesign may be necessary to improve service delivery effectiveness and drive down cost to world-class levels.

Leading finance organizations focus on aligning their structure with corporate strategy. By evaluating these five factors, finance leadership can stay on top of changes in their organization to drive lasting value creation.

Four ways for Shared Services to remain focused on serving their Strategic Business Units

One of the biggest fears of business unit managers when discussing the move to Shared Services is that they'll lose control of their processes to a bureaucratic nightmare.  And it is not completely unfounded.  For too many years corporate services has provided too little value for too much cost.

While a Shared Service Organization can take serve their business units in a variety of ways, there are some essential elements that must be incorporated to ensure long-term responsiveness to the business units and to ensure that the Shared Service Organization is focused on those activities that are truely valued by the business.

  1. Implement a sound governance structure that properly represents business unit interests.  Having the appropriate level of business unit representation will go a long way to ensuring the the SSO understands and is meeting the needs of the business.  These BU representatives should have strong organizational and political authority to represent the business.  Business Unit representatives should be high enough in the organizational hierarchy that they are taken seriously.
  2. Clearly define what success looks like.  There should be clearly defined metrics that measure specific goals, such as cycle times and costs.  There should also be clear agreement with the business on how these metrics are collected, and how often, so that there aren't arguments over who's data is correct.
  3. Regularly reevaluate what has value for the business.  As a general rule, business units value analysis and insight over pure transaction processing; however, that isn't to say that transaction processing isn't important.  It must be done efficiently and with sufficient control to maintain integrity of financial and management information.  But if the SSO is cranking out a monthly management reporting package that no one uses, then the business units has not only spent money needlessly, but they have been deprived of the time spent that could have been allocated towards value-added activities.
  4. Regularly reevaluate the organization structure and responsibilities of the Shared Services Organization.  Markets and businesses change over time.  And these days that happens much faster.  As 3rd party service providers mature, it may make sense to move activities out of the captive SSO and to these 3rd party providers.  Or maybe it makes sense to move an activity back to the business units if the goals for that process haven't been reached after a set amount of time.  The point is that nothing stays the same, and Shared Service Organizations should constantly be looking at how they can reinvent themselves.

By focusing on these four areas, the captive Shared Service Organization can ensure that it remains relevant to the needs of the business it's serving.

China FDI falls. Are cheaper rivals to blame?

While China as been a go-to destination for all sorts of work, including back office service centers, Foreign Direct Investment (FDI) has fallen relative to last year.  No firm conclusions can be drawn from this one statistic alone, but it does raise the question of investment choices as companies evaluate where to make future investments..  

It's no secret that China's coastal cities aren't the bargin they once were.  However, they're still proven locations within China to set up shop, and there are up-and-coming locations in China's interior such as Chengdu, in the Sichuan province in Southwest China.  The challenge for China is that it's lower cost neighbors have been watching China's success and working to emulate them.  That means more choices for Western companies to invest.

A recent article from the South China Morning Post has the details.  Here's an excerpt:

China’s foreign direct investment inflows fell at their fastest rate in more than three years in January, highlighting the challenges it faces competing for funds with cheaper rivals in a sluggish global growth environment.

China Commerce Ministry data on Wednesday showed the world’s second-biggest economy drew in US$9.3 billion (HK$72.12 billion) of foreign direct investment (FDI) in January, down 7.3 per cent on a year ago.

The fall was the steepest in year-to-date inflows since a 9.9 per cent drop in November 2009, and it was the worst January performance in four years.

January FDI was down from December’s US$11.7 billion, with inflows from key Asian economies and the United States down in the latest period, reflecting what analysts say are foreign perceptions of a decline in China’s near-term growth prospects.

Zhang Zhiwei, chief China economist at Nomura in Hong Kong, said the continuing fall in FDI – the longest consecutive run since the global financial crisis – was indicative of the rising competitive challenges facing the world’s biggest manufacturer of exports.

“We expect more multinational companies will increase investment in cheaper countries, such as Vietnam and Indonesia,” Zhang told said.

If nothing else, this story illustrates that companies increasingly have choices when it comes to Asian operations.  A country like Vietnam doesn't necessarily have the infrastructure or trained labor pool that China has, but it isn't for lack of trying.  These countries are making investments in these very areas and may soon be credible alternatives to China for locating operations, including back-office staff for finance and accounting.  

Can business schools teach globalization?

It's always been the goal of MBA programs to offer relevant education that aligns with real world demands.  With the increased emphasis on globalization, MBA programs have tailored their programs to provide a stronger understanding of globalization.  But just how effective have these programs been in adapting to real world globalization issues?

The Wall Street Journal conducted an interview with Pankaj Ghemawat, a professor of global strategy at the IESE business school in Barcelona, Spain.  His central premise is that schools need to do a better job of explaining, not only the opportunities of globalization, but also the limits.  He points out that the common perception is that globalization is much further along than it really is.  The world is getting flatter, but it's not nearly as flat as people think it is.

Another point made by Professor Ghemawat is that more MBA programs are incorporating trips into their program to expose students to other cultures.  But how much can really be assimilated in a one or two week trip to another country?  Can it impose the illusion of understanding which could actually be damaging to students understanding of globalization?

These are relevant questions for finance organizations that are recruiting from MBA programs.  What skills should a finance organization expect from new recruits?  What additional training is required to develop a mature understanding of the opportunities and limits of globalization?  In subsequent posts I'll discuss my thoughts on what finance organizations can do to develop global competencies, not just with newly hired MBAs but with their global organization.

It's an interesting read and you can catch the entire interview at Can Globalization be Taught in B-School?

Unilever partners with Capgemini to enhance global service delivery for finance and accounting

As finance organizations continue their quest to build global delivery capabilities, some companies are leveraging the networked organizational model.  In this archetype, companies partner with 3rd party service providers to provide capabilities that provides services that would be difficult to replicate in-house. An example is the recently announced deal between Unilever and Capgemini to provide finance and accounting services to 130 countries.  An excerpt from the press release:

Paris, 19 December 2012 – Capgemini, one of the world’s foremost consulting, technology and outsourcing services providers has been selected by Unilever, one of the world’s leading consumer goods companies, as one of its global Strategic Suppliers under its ‘Partner to Win’ programme. Capgemini has also been awarded a more than €100 million five-year outsourcing contract for Unilever continuing its seven-year relationship delivering Unilever’s Southern Hemisphere Record to Report operations, global intercompany processes, as well as Access Control and Reporting & Monitoring globally.

Outsourcing a substantial portion of a finance organization is not for every company.  It takes a huge cultural shift to move in that direction.  However, for companies like Unilever, it enables them to create a more effective global delivery network for finance while enabling them to focus on their core business.

You can read the entire press release at: Capgemini signs a new Finance & Accounting outsourcing contract with Unilever.


Supporting Finance Transformation Post Go-Live

In 2012 I created a series of posts around Finance Transformation Gone Wrong, and the ways that transformation leaders and teams can avoid those pitfalls.  Hopefully you've had a chance to incorporate that thinking into your own transformation efforts.  A serious error that I've seen in my years as a consultant is companies who fail to support the transformation program after the "go-live". That go-live could be an actual systems launch, or it could be a redesign of a company's organizational structure.  In any event, changes made during the transformation need to be reinforced post go-live in order for the changes to be firmly anchored in the company's culture.  With that in mind, here are some things to consider as you plan and execute a finance transformation program.

  1. Keep the transformation team together for a defined period after go-live.  Too many times companies are eager to get the transformation team personnel back to their "regular" positions.  If the company was smart, they put some of their best people on the project, so the desire to redeploy these individuals is, in part, understandable.  However, dissolving the team prematurely puts all of the hard word at risk.  A "quick strike" team is needed to solve issues that inevitably crop up after a project launch.  Let your experience team be available to assist where needed and reinforce the reality and perception of a successful project.
  2. Eliminate the "old way" of doing things.  Once an organization has crossed over the bridge to a new way of life, don't let people fall back into the old way of doing things.  This can range from exerting the organizational authority of a governance council to blocking access to old software applications.  If people are allowed to revert to past behaviors, some portion of people will do so.
  3. Reinforce expected behaviors.  People need to be reminded of the new behaviors that are expected.  Any positions that changed materially as part of the transformation should have had updated role descriptions created.  The program leaders should be visible and vocal to ensure that people understand what is expected and how their performance is critical to the transformation initiative.
  4. Promote the success of the transformation program.  During the transformation process, the metrics that define success should have been developed.  Post go-live is the time to start tracking the progress of the program and measuring that progress against the key metrics.  Most programs will meet or exceed some goals while requiring adjustment to achieve others.  This is to be expected.  Individuals in the organization should understand the success and opportunities of a newly implemented transformation program, and this requires transparency.  Yes, that can be a little scary at times, but it's required for people to understand how their new behaviors contribute to the program success.

Finance Transformation programs require a great deal of work and sacrifice.  It's critical that the momentum of a transformation program be maintained post go-live to ensure the full success of the program.

China passes U.S. as top FDI destination

China recently passed the U.S. as the country of choice for Foreign Direct Investment (FDI). In the first half of 2012, China (excluding Hong Kong) received FDI of $59.1 billion compared to the U.S.' $57.4 billion (Source: Global Investment Trends Monitor released by the United Nations Conference on Trade and Development).

Here's a graph that shows relative FDI:

2012.Oct China FDI.jpg

Not all is rosy for China though. According to an article in the China Daily, China is losing some investments to neighboring countries in Southeast Asia. An excerpt:

Developing economies for the first time absorbed half of global FDI in the first half of 2012, despite a decline of 5 percent year-on-year.

"China is experiencing structural adjustments in their FDI flows, including the relocation of labor-intensive and low-end market-oriented FDI to neighboring countries," said the report.

Members of the Association of Southeast Asian Nations demonstrated strong attraction for global foreign direct investment. FDI inflows to Cambodia surged by more than 165 percent year-on-year in the first half, while inflows to Thailand rose by 62.1 percent and inflows to the Philippines increased by 10.6 percent, according to the report.

"For investment oriented with low costs, pulling out is normal and will continue in the future owing to China's rising costs and appreciation of local currency," Zhang said.

You can read the full article at: http://usa.chinadaily.com.cn/business/2012-10/29/content_15854071.htm

Brazil power outage reveals strain on country's infrastructure

Brazil has been in the news lately, and not for the reasons it would like.  Brazil recently suffered a failure of its electrical system that impacted large portions of the country, and highlighted the strain of growth that has been placed on the country's infrastructure.

Brazil has been at the forefront of economic development in Latin America.  Cities like Sao Paulo and Rio have been traditional choices for Shared Services but other cities like Campinas and Curitiba are also experiencing growth as more multinationals move into those cities.  The overall effect, along with the demand for electricity from Brazil's population, has put the spotlight on the country's infrastructure. Other sources of blame for the failure include government regulation, forced rate cuts and inadequate investment in transmission capabilities.

An article from Businessweek highlights the problems.  Here's an excerpt:

Power was knocked out in 11 Brazilian states last night, leaving residents in the dark for several hours as the country’s latest blackout raises questions about the reliability of the electricity grid.
Power failures can occur in any country.  Just ask India.  But as multinationals evaluate various locations around the globe for potential shared service center sites, it's good to keep in mind which countries can keep the lights on.
Source: http://www.businessweek.com/news/2012-10-26/brazil-suffers-fifth-power-outage-since-crackdown-on-utilities
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